Sideways trade on Equity Residential

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Equity Residential is flattening out after a long ascent, and one investor is looking for it to move sideways.

optionMONSTER's tracking systems detected the sale of 5,000 August 60 calls for $1.35 and 5,000 August 60 puts for $3. There was no open interest in either contract before the activity occurred.

The transaction generated a credit of $4.35, which the trader will keep if EQR closes at $60 on expiration. Gains will erode on either side of that level, and turn to losses below $55.65 and above $64.35.

The real-estate investment trust is up 0.1 percent to $58.52 in afternoon trading. It climbed about 40 percent between April 2010 and April 2011, but gains have been slowing since then as shares push against their all-time high around $61 from late 2006.

Stocks often pause at such levels, creating opportunities for market-neutral strategies that make money from the passage of time rather than a directional move. Today's trade, known as a short straddle, is one of the most popular. (See our Education section)

Overall option volume in EQR is 9 times greater than average so far in the session.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: EQR

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